Is the Biodiesel Nightmare Over?

Congress has allowed a $1 per gallon subsidy on biodiesel fuel to expire, causing the struggling “faux fuels” enterprise to stumble to a halt. According to The Brock Report, an agri-business consultancy, “that industry has all but closed up shop.” The Brock announcement also included this:

“Pretty much every plant is idle,” said Michael Frohlich, Director of Communications for the National Biodiesel Board (NBB).

Even with the federal tax incentives, the biodiesel industry was already in deep trouble. U.S. biodiesel production was down 31% last year compared to 2008 due to a lack of profitability.

Monte Shaw, Executive Director of the Iowa Renewable Fuels Association says only 73 million gallons of biodiesel were produced last year from that state’s production capacity of 320 million gallons. Nationwide, last year’s capacity utilization was even worse than in Iowa at only 15%.

Bio-diesel fuel is made from soybeans, an essential foodstuff. As we have discussed repeatedly here, to divert crops from the world food markets as hundreds of millions hover on the edge of famine is a travesty.

Like its evil twin, ethanol, biodiesel is an unnatural product that has no place in the world. Not only do these faux fuels take food from hungry humans, they encourage over-planting, resource depletion, and soil erosion. By causing commodity prices to be bid up, they increase food prices worldwide, a cascade effect that hits eveyone from middle class Americans to the poorest of the poor in the Third World.

I don’t know if the Senate failed to extend the subsidy on biodiesel through wisdom or mere carelessness, but whatever the reason, the result is one that we can heartily support.